Many Canadians are feeling the pressure of high housing and energy costs. With no relief in sight, many have been searching for alternative methods to generate extra income or reduce housing expenses. One option is to generate extra income by renting out a spare bedroom in their home.
Home-sharing, as it is known, is a fantastic way to create supplemental monthly earnings with additional benefits that go beyond the extra revenue earned. To qualify as a home-sharing arrangement, the person renting the room must share a kitchen or bathroom with the owner or primary tenant of the home. Unlike typical landlord-tenant arrangements, the host and guest of a home-sharing arrangement live together and interact with each other on a daily basis.
In recent years, home-sharing has been growing in popularity, but many people still find it difficult to open their home to strangers. Home-sharing services, like Happipad, are starting to pop up around the world to help people share their home with others more easily than ever before. If you’re considering home-sharing, here’s a list of some of the many benefits that opening your home can provide.
1. Home-sharing provides extra income
Let’s start with the obvious one. Depending on your location, the surrounding amenities, and the quality of your home, home-sharing can generate anywhere from $500 to $1000 of extra income each month per spare bedroom you are renting out. That’s a lot of supplemental income for a space that wasn’t seeing much use before. If you have a semi-separate inlaw suite but your guest still shares a kitchen or bathroom with you, it might be possible to earn even more.
This extra cash can go a long way to helping you cover your monthly mortgage payments or even qualify for a mortgage in the first place. Since most banks will ask you for your last two tax returns when qualifying for a mortgage any additional income claimed can help you qualify for a larger loan towards your next home purchase. On the flip side, if you are planning to sell your home, you can use those spare bedrooms or illegal suites as enticing promises of extra income for your potential buyers.
And this leads to another benefit of this extra income….
2. Many home-sharing expenses can be written off
While the rent you receive from home-sharing is taxable income, there are many eligible expenses you can claim to help offset the costs of home ownership. Generally, you can deduct any reasonable expense you incur to earn rental income, including operating expenses and capital expenses. The portion of housing expenses is usually determined by the percentage of square footage used by your guest. Some expenses that can be considered include:
- Maintenance and repair costs
- Property taxes
- Condominium/strata fees
- Administration and management fees
- Home-sharing service fees
For more in depth details check out Happipad’s handy Tax Guide to learn more.
3. Help around the house
Maintaining a household often feels like a fulltime job itself. Home-sharing is a great way to share some of the everyday responsibilities of running your home. Tasks such as household chores, yardwork, and cooking are often divided between the host and guest. In some cases, particularly with older senior hosts, the guest pays reduced rent in exchange for additional help around the home.
For all you frequent travellers, having a guest around the home while you are away offers additional benefits. Save money on things like house sitting, pet care, and rest at ease knowing there is someone at home to collect the mail and water the plants.
Speaking of plants….
4. Home-sharing is good for the environment
It turns out living together also has the potential to impact the sustainability of the entire Canadian housing economy. How? Home-sharing contributes a boost to current housing inventory without requiring any additional construction. Every spare room that is offered is one less person that requires their own space. As this Vancouver column describes, the math works out just like carpooling, “whether it is a car or a home: one person traveling alone in a vehicle represents a much costlier per capita commute than 30 people sharing a bus.”
Okay, but what do the numbers look like for spare rooms? According to the 2011 Canada census, about 31% of bedrooms in Canada sit empty! In Canada’s two biggest cities, Vancouver and Toronto, 18% and 16.6% of bedrooms sit empty, respectively. Montreal’s empty bedroom rate is on par with Vancouver at 18.1%, and Calgary has a much higher empty bedroom rate at 31.6%. A report by the Canadian Centre for Economic Analysis estimates that over half of the population of Ontario is overhoused and that there are over 5 million empty spare bedrooms in Ontario alone. That is equivalent to 25 years’ worth of construction! Imagine if those same empty spare bedrooms were instead used to house people in need of affordable housing. Are you starting to see why home-sharing is such a popular topic right now?
5. Home-sharing is not subject to short-term rental regulations
Home-sharing is also popular because it’s a fully legal and bylaw compliant way to earn additional income. As long as the person living at your home shares either a kitchen or bathroom space with you and stays for at least one month they fall under home-sharing and should be entirely legally compliant with the laws and regulations in your area.
Just be aware, offering your home for shorter periods than one month might cause you to fall under the hotels act or be subject to vacation rental bylaws meaning you may be asked to shut down if you do not have a business license. In fact, this is one of the many reasons big companies such as AirBnb are subject to so much controversy since their short-term rental policies often put people at odds with the local laws. As a result, many communities are instituting stricter business licensing around short term rentals.
An added benefit of home-sharing is that you can avoid all this kerfuffle simply by ensuring you rent for longer than one month and share a kitchen or bathroom space with our Guest. As a result, home-sharing falls outside the Residential Tenancy Act and offers you more freedom to set house rules the way you see fit. And if you really want some additional legal peace of mind consider using a home-sharing service such as Happipad which offers automatic legal contract generation and ongoing support if you have any questions.
6. Home-sharing builds new connections
Although people often take care of their economic needs first, studies have repeatedly shown that there are a number of intangible benefits to home-sharing that go well beyond the monetary benefits. Key among those is the new social connections that you build through home-sharing and the increased happiness that results. According to Psychology Today having someone around the home to chat with and share our day increases our overall happiness. “The bottom line: sharing our joy increases joy. Telling people about our happiness has far greater benefits than just remembering it or writing it down for ourselves.”
In one study over 50% of owner respondents identified home sharing as providing some form of companionship. From the renter’s perspective, over 50% indicated they were interested in both companionship and a family environment. Why so many? According to one Statistics Canada study, the issue of social isolation is on the rise as “[t]he number of persons living alone in Canada has more than doubled over the last 35 years, from 1.7 million in 1981 to 4.0 million in 2016.” It’s no wonder that home sharing is perceived to provide a sense of community and belonging.
And while we are on the topic of community….
7. Avoid downsizing
How about being able to afford to stay in the community you love so much. Do you have a beautiful home but the kids have long since moved out and you are finding it more and more difficult to justify the costs of maintaining it? Or perhaps your grandparents are struggling to keep up with the bills but really don’t want to leave their lifelong home.
Home-sharing allows people who would otherwise not be able to stay living in their home an opportunity to remain in the communities they want to be a part of. By combining all the previous benefits discussed many people find that it once again becomes both manageable and affordable. Many even find the home becomes livelier and filled with renewed life.
So with all these benefits what’s next?
If home-sharing sounds like an appealing prospect to you I’d definitely suggest giving it a go. If you are unsure where to start yourself, or simply want some additional support, consider connecting with a specialized home-sharing service such as Happipad, which offers personalized support and guidance throughout your entire home-sharing experience. Including legal contracts, advertising, guest profile matching, guest screening and verification, and automated rent payments.
Learn more at www.happipad.com